Grupo BTG Pactual’s share price up, to acquire Generali’s Swiss BSI unit for $1.7 billion

The only investment bank that is publicly traded in Brazil – Grupo BTG Pactual was announced to have reached an agreement with Assicurazioni Generali SpA to acquire its Swiss private-banking unit in a deal estimated to 1.5 billion Swiss francs (almost 1.7 billion dollars).

Mr. Andre Esteves, who is the current Chief Executive Officer of Grupo BTG Pactual said in a statement, which was cited by Bloomberg: “This acquisition reflects our confidence in the tradition and strength in Switzerland as a global financial center. It’s an opportunity to build one of the biggest global private-banking platforms.”

According to the stock-exchange statement of Generali, Grupo BTG Pactual is to purchase the BSI Group division at the price of 1.2 billion Swiss francs in cash and 300 million Swiss francs in shares in units listed in Brazil. The Italy-based insurer explained that the deal is expected to provide it with the opportunity to add 9 percentage points to its Solvency 1 ratio.

As reported by the Wall Street Journal, the Chief Executive Officer of Generali – Mr. Mario Greco said: “With this transaction we exceed our Solvency 1 target, restoring the capital base of Generali over a year in advance of our 2015 plan.”

The transaction is considered the largest one in the history of Grupo BTG Pactual when it comes to the asset management sector. The deal was also said that will double the banks assets under management to 200 billion dollars and will also increase the number of its employees from 3 000 to 5 000 people. Thanks to the acquisition of the Swiss private-banking unit of Generali, BTG will also be able to expand its reach on the territory of Europe and Asia.

The deal between the Italian insurer and the Brazil-based investment bank is considered a major step in Generalis turnaround, which was started by its Chief Executive Officer Mr. Greco about a couple of years ago.

One of the managing partners of Grupo BTG Pactural – Mr. Steve Jacobs commented on the deal for the Financial Times: “This is the right deal at the right moment for us. We will spend some time bedding it down and see it is done rightly and correctly. After that we don’t rule out in 18 months or two years looking at infill [acquisitions].”

Grupo BTG Pactural was 1.02% up to close at 34.500 Brazilian reals per share yesterday, marking a one-year change of +27.13%.